Page:United States Statutes at Large Volume 54 Part 1.djvu/852

PUBLIC LAWS-CH. 686-AUG. 22 , 1940
I securityis a stock.
Calculation of asset
coverage.
case, such class of senior securities has at the time of the
declaration of any such dividend or distribution or at the
time of any such purchase an asset coverage of at least 300
per centum after deducting the amount of such dividend,
distribution, or purchase price, as the case may be, except
that dividends may be declared upon any preferred stock
if such senior security representing indebtedness has an
asset coverage of at least 200 per centum at the time of
declaration thereof after deducting the amount of such
dividend; and
(C) provision is made either-
(i) that, if on the last business day of each of twelve
consecutive calendar months such class of senior securi-
ties shall have an asset coverage of less than 100 per
centum, the holders of such securities voting as a class
shall be entitled to elect at least a majority of the mem-
bers of the board of directors of such registered com-
pany, such voting right to continue until such class of
senior security shall have an asset coverage of 110 per
centum or more on the last business day of each of
three consecutive calendar months, or
(ii) that, if on the last business day of each of twenty-
four consecutive calendar months such class of senior
securities shall have an asset coverage of less than 100
per centum, an event of default shall be deemed to have
occurred;
(2) if such class of senior security is a stock-
(A) immediately after such issuance or sale it will have
an asset coverage of at least 200 per centum;
(B) provision is made to prohibit the declaration of any
dividend (except a dividend payable in common stock of
the issuer), or the declaration of any other distribution,
upon the common stock of such investment company, or
the purchase of any such common stock, unless in every
such case such class of senior security has at the time of
the declaration of any such dividend or distribution or at
the time of any such purchase an asset coverage of at least
200 per centum after deducting the amount of such divi-
dend, distribution or purchase price, as the case may be;
(C) provision is made to entitle the holders of such
senior securities, voting as a class, to elect at least two direc-
tors at all times, and, subject to the prior rights, if any, of
the holders of any other class of senior securities outstand-
ing, to elect a majority of the directors if at any time divi-
dends on such class of securities shall be unpaid in an
amount equal to two full years' dividends on such securities,
and to continue to be so represented until all dividends in
arrears shall have been paid or otherwise provided for;
(D) provision is made requiring approval by the vote of
a majority of such securities, voting as a class, of any plan
of reorganization adversely affecting such securities or of
any action requiring a vote of security holders as in section
13 (a) provided; and
(E) such class of stock shall have complete priority over
any other class as to distribution of assets and payment of
dividends, which dividends shall be cumulative.
(b) The asset coverage in respect of a senior security provided
for in subsection (a) may be determined on the basis of values cal-
culated as of a time within forty-eight hours (not including Sundays
818
[54 STAT.